China’s smartphone vendors gear up for strong iPhone 14 sales

Vendors in Huaqiangbei market in the southern tech hub of Shenzhen are gearing up for strong sales of the iPhone 14, with price mark-ups of up to 2,000 yuan (US$255) expected, as local Chinese brands still struggle to usurp the appeal of the iconic Apple handset in the high-end segment.

Huaqiangbei, a key sourcing centre for electronics gadgets and components, is closed temporarily due to the city’s rigid Covid-19 control measures, but one merchant surnamed Zheng said he has seen strong early demand. “I’ve already been bombarded with requests for the new iPhone,” said Zheng, with official pre-orders for the iPhone 14 series starting tonight ahead of official sales on September 16.

“For popular models such as the iPhone Pro Max, a premium of 2,000 yuan is expected on debut day,” said Zheng. The mark-ups on other models are expected to range from 500 yuan to 1,000 yuan, he added. “It will be hotter than last year’s iPhone 13.”

Zheng, like thousands of other merchants in Huaqiangbei, has a shop and a back office there. The shop remains closed due to a lockdown in place since late August. However, his office has opened and Zheng is busy manning the phones.

Apple on Wednesday unveiled four new models of its iconic iPhone: the iPhone 14, iPhone 14 Plus, iPhone 14 Pro and iPhone 14 Pro Max, with prices beginning at 5,999 yuan for the mainland China market. In models for China, the eSIM function will not be available as no Chinese telecoms carrier supports it. Emergency messaging via satellite is also disabled on China models, a development that has stirred memories of the days when China did not allow Wi-fi functions on iPhones. It was subsequently permitted in 2010.

The overall iPhone pricing strategy and features of the new iPhone has drawn interest, particularly the iPhone 14 Pro and Pro Max with the Dynamic Island function and better cameras. Dynamic Island is a newly-introduced feature that turns the notch of iPhone 14 Pro models into a hub for notifications and user interaction.

Lin Shen, a so-called “backpack” dealer of smartphones in Shenzhen without a physical store, said he is scrambling to source new phones for clients. “The lockdown is making it more difficult to source handsets for them,” Lin said.

Lin said a number of dealers in Huaqiangbei, which often serves as a grey market for smuggled-in gadgets from Hong Kong, are hesitant about placing orders for the US version of the iPhone 14 with its eSIM design, which will not function in China.

US versions of iPhone models have previously proven popular in China’s grey market due to competitive pricing, but the new US iPhone 14 will only work in the country if the user signs up for a foreign operator plan for eSIM services, which will be a major hassle for mainland users. “We need to wait and see if the Huaqiangbei engineers find a way to bypass that,” Lin said.

The iPhone 14 launch comes amid weakening demand for smartphone consumption in the China market, which has been battered by a slowing macro economy and disruptions in supply chains amid China’s strict Covid-19 control policies. China’s smartphone shipments for the first six months of 2022 plunged 21.7 per cent year-on-year to 136 million units, according to the latest report by state-backed research institute the China Academy of Information and Communications Technology.

However, in the second quarter iPhone sales in China surged 25 per cent from a year ago, according to Canalys, a market research firm. Efforts by local smartphone brands, including Vivo, Oppo and Xiaomi, to take on the iPhone’s dominance in the high-end market have yet to bear fruit.

Days before the unveiling of Apple’s iPhone 14, Huawei Technologies Co, which has had its access to US-origin technology such as high-end chips cut off by sanctions, launched its Mate 50 model. However, the high-end Mate 50 series does not support 5G functions even though Huawei has been a big cheerleader for 5G development in China.

Zheng, the Huaqiangbei seller, said Huawei – once China’s smartphone leader – is losing further ground to Apple as it has no advanced chips to power its new models. South China Morning Post